Silgan (US:SLGN)2025-02-27 20:47Sales Performance - Net sales for the dispensing and specialty closures business reached $2.3 billion in 2024, representing a compound annual growth rate of approximately 12.1% since 2003[163]. - Net sales for metal containers decreased by approximately 8% in 2024 compared to 2023, totaling $2.9 billion, primarily due to lower volumes in the fruit and vegetable markets[165]. - Custom containers net sales increased to $649.6 million in 2024, reflecting a compound annual growth rate of approximately 5.5% since 1987[165]. - Consolidated net sales for 2024 totaled $5.85 billion, a decrease from $5.99 billion in 2023[175]. - Consolidated net sales for 2024 were $5.9 billion, a 2.2% decrease from 2023, primarily due to lower organic volumes and unfavorable product mix[176]. - In 2024, net sales for the dispensing and specialty closures segment increased by $83.0 million, or 3.7%, compared to 2023, primarily due to the acquisition of Weener Packaging and a favorable product mix[194]. - In 2024, net sales for the metal containers segment decreased by $240.1 million, or 7.6%, compared to 2023, mainly due to lower raw material costs and a less favorable product mix[199]. - In 2024, net sales for the custom containers segment increased by $23.6 million, or 3.8%, compared to 2023, driven by higher volumes from new business awards[204]. Financial Performance - The gross profit margin improved to 17.3% in 2024, compared to 16.6% in 2023[174]. - Gross profit margin increased to 17.3% in 2024, up 0.7 percentage points from 16.6% in 2023[177]. - Income before interest and income taxes decreased by $80.3 million in 2024, with a margin decline to 8.8% from 9.9% in 2023[178]. - Adjusted EBIT for 2024 was $658.2 million, slightly down from $660.5 million in 2023[193]. - Adjusted EBIT for the dispensing and specialty closures segment increased by $25.0 million in 2024, with the adjusted EBIT margin rising to 15.9% from 15.3%[196]. - Adjusted EBIT for the metal containers segment decreased by $40.0 million in 2024, with the adjusted EBIT margin falling to 8.4% from 9.0%[201]. - Adjusted EBIT for the custom containers segment increased by $17.7 million in 2024, with the adjusted EBIT margin rising to 12.5% from 10.1%[206]. Cost Management - The company achieved approximately $20 million in cost savings in 2024 from a comprehensive cost reduction initiative, with an expectation of an additional $30 million in 2025[166]. - Selling, general and administrative expenses rose to 7.5% of net sales in 2024, an increase of 1.1 percentage points compared to 6.4% in 2023, with a total increase of $53.7 million[177]. - Rationalization charges in 2024 amounted to $59.5 million, primarily related to plant closings as part of a cost reduction initiative[178]. - The Obligor Group recognized rationalization charges of $59.5 million in 2024 as part of a comprehensive cost reduction initiative, which included closing three manufacturing facilities[241]. - The company continually evaluates cost reduction opportunities, with expected remaining cash expenditures for rationalization plans at $10.9 million[246]. Debt and Financing - The company's interest and other debt expense as a percentage of income before interest and income taxes was 32.3% in 2024, up from 29.1% in 2023[172]. - Interest and other debt expense for 2024 was $167.4 million, a decrease of $5.9 million from $173.3 million in 2023[179]. - As of December 31, 2024, the company had total consolidated indebtedness of $4.15 billion and cash and cash equivalents of $822.9 million[218]. - In October 2024, the company borrowed €868.0 million to fund the acquisition of Weener Packaging[209]. - The company has $1.5 billion available under a multi-currency revolving loan facility, with $1.48 billion available after accounting for outstanding letters of credit of $20.5 million as of December 31, 2024[219]. - Total contractual cash obligations as of December 31, 2024, amount to $5.15 billion, with $960.4 million due within one year[228]. - The company had $4.15 billion of outstanding indebtedness as of December 31, 2024, with $1.8 billion bearing interest at floating rates[234]. - The company has $300.0 million aggregate notional principal amount of U.S. dollar interest rate swap agreements outstanding, maturing in 2026[234]. - A one percentage point change in interest rates for variable rate indebtedness would have impacted 2024 interest expense by approximately $11.3 million[258]. Tax and Compliance - The effective tax rate improved to 20.7% in 2024 from 22.8% in 2023, benefiting from tax restructuring activities[180]. - The company is in compliance with all financial and operating covenants and expects to maintain compliance in 2025[227]. Investments and Acquisitions - The company plans to pursue further acquisition opportunities in the consumer goods packaging market to enhance growth[161]. - The acquisition of Weener Packaging in Q4 2024 contributed to net sales, partially offsetting declines in other segments[176]. Cash Flow and Capital Expenditures - In 2024, cash provided by operating activities was $721.9 million, with net capital expenditures and other investing activities totaling $254.7 million[215]. - The company plans capital expenditures of approximately $300.0 million in 2025, with principal payments of $712.4 million due in 2025 and $1.3 billion in 2028[227]. - Approximately 12% of annual net sales for 2024 and 2023 were subject to customer-based supply chain financing (SCF) arrangements, improving days sales outstanding by approximately 24 days for 2024[222]. - Outstanding trade accounts payables subject to the supplier SCF program were approximately $303.7 million as of December 31, 2024, with 12% of Cost of Goods Sold in 2024 and 2023 subject to this program[223]. Pension and Investments - The company’s U.S. pension plans are overfunded, with plan assets approximately 137% of projected benefit obligations as of December 31, 2024[248]. - The company recorded income from equity method investments of $106.1 million for the year ended December 31, 2024[240]. - The company received dividends from other subsidiary companies amounting to $12.3 million for the year ended December 31, 2024[240].